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Judge Approves Sunbeam Recovery Plan

Sunbeam's recovery plan was approved by a federal bankruptcy judge yesterday, after bondholders dropped their objections, clearing the way for the company, the nation's largest maker of small appliances, to emerge from Chapter 11 reorganization.

Judge Arthur Gonzalez approved Sunbeam's plan to give secured lenders almost all the shares of the company and leave bondholders, who were owed more than $862 million, with a tiny fraction of their original investment.

Lenders, led by Morgan Stanley, Wachovia and Bank of America, will get shares worth one-third of the more than $1.6 billion they are owed. Bondholders, who had fought the plan, will get 1.5 percent of the stock in the new company. Current shareholders of Sunbeam, which is based in Boca Raton, Fla., get nothing.

''It is an unfortunate situation that so much value has been lost,'' Judge Gonzalez said yesterday. ''But it is what it is, and I can't change it.''

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Most of the $3.2 billion in debt cited in the bankruptcy filing was accumulated when Sunbeam acquired the Coleman Company, First Alert Inc. and Signature Brands USA Inc. in 1998 under the former chief executive, Al Dunlap.

The Justice Department is investigating Sunbeam's finances from 1996 through 1998, while Mr. Dunlap was chief executive and Russell A. Kersh was chief financial officer, according to the recovery plan. In September, Mr. Dunlap agreed to pay $500,000 to settle Securities and Exchange Commission accusations that he cheated investors by inflating sales figures. Mr. Kersh agreed to pay $200,000.